Opendoor Technologies (NASDAQ: OPEN) saw its stock continue its steep decline this week, hitting a 15-month low of $2.65. The shares have now fallen roughly 75% from their peak last year, as the combination of elevated mortgage rates and a sluggish housing market weighs heavily on the company's business model.
The latest leg down comes as the average 30-year fixed mortgage rate in the U.S. has climbed to 7%, according to recent data. This surge has been driven by a sharp rise in Treasury yields, with the 10-year note crossing the 5% threshold for the first time in over two decades. A Reuters poll suggests that rates will stay higher for longer, partly due to geopolitical tensions in the Middle East, which have fueled a flight to safety in bonds.
Higher borrowing costs are taking a toll on the housing market. The S&P CoreLogic Case-Shiller 20-City Index projects home prices will rise just 1.5% this year, barely above last year's 14-year low of 1.4%. Existing home sales are expected to average an annualized 4 million units in the current quarter and 4.1 million in the first quarter of 2027, well below the 6.6 million peak seen in 2021.
Opendoor's CEO acknowledged the challenging environment in the company's latest earnings report. She noted that the deteriorating housing market at the end of August pushed the company's adjusted EBITDA profitability timeline back by six to eight weeks. The company now expects to achieve that milestone within a twelve-month window starting this quarter, rather than last quarter.
The financial results reflect the strain. Revenue for the second quarter fell to $883 million, down from $1.56 billion in the same period a year earlier. Gross profit dropped by over $42 million to $86 million. The company also sold fewer homes than it purchased, buying 4,378 properties while selling 2,339, which increased its inventory to 5,459 homes. Adjusted net loss widened to $30 million.
Despite the setbacks, analysts remain cautiously optimistic about the near term. The eight analysts covering Opendoor expect third-quarter revenue to rise 19.6% to $1.09 billion, while full-year revenue is projected at $3.9 billion, a 10% decline from the prior year.
Technical outlook: bearish momentum persists
From a technical perspective, Opendoor's stock has been in a pronounced downtrend. The weekly chart shows the shares breaking below a key support level at $4.14, which had held as a floor in February, April, and May of this year. This breakdown confirms the bearish bias.
The Relative Strength Index (RSI) has been trending lower and is now hovering near the oversold threshold of 30, indicating that selling pressure is accelerating. The most likely scenario is further downside, with the next major support level around $2.00.
However, some investors may view the current levels as a potential buying opportunity, given the stock's high short interest of 22%. A short squeeze could trigger a rebound, but the fundamental headwinds from mortgage rates and housing market weakness remain significant.
For context, the broader housing sector is also under pressure, as seen in UK homebuilders' recent declines and weak mortgage approval data. These trends highlight the global nature of the current housing slowdown.
Investors will be watching Opendoor's next earnings report for signs of improvement, but the near-term outlook remains clouded by the persistent rise in mortgage rates and the company's ongoing profitability challenges.
This article is for informational purposes only and does not constitute financial advice.
